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Better, cheaper targeting
-Business Standard

Sensible suggestions from Shanta Kumar panel on food security

The Shanta Kumar committee on food sector reforms has made a slew of recommendations - many of which, even if controversial, make sense. Apart from suggesting downsizing of the unwieldy, inefficient and corruption-ridden Food Corporation of India (FCI) by outsourcing many of its tasks to the states and other public- and private-sector bodies, the panel has laid out certain amendments to the National Food Security Act that it argues would improve its targeting and implementation. It has also proposed gradual shifting towards payment of fertiliser and food subsidies in cash. This could help slash the government's fertiliser subsidy bill by some Rs 15,000-20,000 crore, and the food subsidy outgo by around Rs 30,000 crore annually. Unsurprisingly, the international investment rating agency, Moody's, has hailed these recommendations, saying that their implementation would reduce inflationary pressures and the fiscal deficit - and boost India's sovereign rating.

The committee has done well to depart from the avowed stand of the ruling Bharatiya Janata Party - to trifurcate the FCI into separate entities handling procurement, storage and distribution operations. The report instead suggests delegating grain procurement largely to the states, especially in the major grain-surplus regions, and outsourcing storage to the central and state warehousing corporations and the private sector. Delivery of food through the public distribution system is even now the responsibility of the state governments. The panel wants the FCI to focus chiefly on price-support operations in the eastern region, where distress sales by farmers are quite common for want of official procurement. These suggestions have, predictably, been opposed by the FCI's unionised employees as these could convert the FCI virtually into a regulatory body, with a far thinner staff strength. Some activists, too, are worried because the panel suggests slashing coverage under the food security law from 67 per cent to 40 per cent and increasing the selling prices of rice and wheat for the non-poor to around 50 per cent of the minimum support prices. The committee, however, argues that 40 per cent population coverage would safely manage to include all below-poverty-line families and perhaps even some more under the food security statute. The identification of beneficiaries would, however, remain a problem in the absence of firm and easily verifiable criteria laid down by the committee for this purpose.

Besides, the panel's proposal for raising the monthly food quota for the poorest of the poor (Antyodaya households) from five to seven kg per head also seems well founded, given that the consumption of staple cereals tends to be relatively higher among the poor. This would reduce their reliance on the market for supplementing their food needs. Thus, on the whole, the remodelled food management system outlined by the Shanta Kumar committee seems capable of effectively serving the twin objectives of ensuring food security for the poor and providing price support to the farmers in a cost-effective manner and without distorting the food market. The government should consider it with the seriousness that it merits.